Viacom has told Vivendi that it wants to be considered in the second round of bidding for Universal as a potential buyer of U’s two cable networks and, possibly, Universal Television.
Viacom didn’t bid the first time around because Vivendi requested offers for all of Vivendi Universal Entertainment. But Sumner Redstone’s conglom clearly wants to keep its foot in the door in anticipation of alliances further on in the sale process where various bidders could slice and dice VUE’s assets. Viacom has zero interest in the movie studio or in Universal Music, sources said.
With a healthy crop of offers for VUE – five so far, a succession of debt crises behind it and its share price perking up, Vivendi Universal suddenly seems to be sitting pretty. Company sources insist there’s no need to rush into a deal and, in fact, that a prolonged auction may be in Vivendi’s best interest.
Ratings agency Moody’s put its seal of approval on the fiscally challenged Gallic firm Thursday. The credit arbiter upgraded its outlook on Viv U’s debt from negative to stable, reflecting its “successful refinancing steps,” which afford the company “additional flexibility in conducting its ongoing asset-disposal program.”
But paradoxically, Viv U’s relatively comfortable position is precisely why experts believe that the conglom may be eager to push things forward as expeditiously as possible.
“They haven’t had budgetary problems for several months and the perception of the company is improving in terms of risk; lenders have been feeling relaxed for several weeks,” said one Paris banking source. “That coupled with the share price makes this the ideal time to press ahead with the VUE sale while the going’s good.”
Picture still muddy
If only it were that simple. The multiplicity of offers for all or parts of the U.S. entertainment assets coupled with issues such as tax liabilities that must be thrashed out make the process anything but straightforward. Even Moody’s noted Thursday that the ownership complexities and potential tax issues make a timely sale of VUE a challenging task for management to achieve.
Viv U’s board is scheduled to meet in Paris next Tuesday and is expected to whittle its list of five bidders down to three or four. So far, four of the preliminary nonbinding offers are believed to contain concrete cash valuations (from Liberty Media, MGM, Marvin Davis and Edgar Bronfman Jr.), while NBC has proposed an elaborate joint venture entertainment conglom that can still solve Vivendi Universal’s short-term debt issues, according to Peacock sources
On the clock
“It’s complicated, and due diligence in a case like this could take a lot longer than Vivendi would like,” commented an analyst.
Viv U also has myriad other pros and cons to weigh as it reviews the various offers that came in this week. It may suit the conglom just fine, for instance, if the eventual buyer of VUE would take other morsels of the unwieldy media empire off its hands, such as NC Numericable, Canal Plus’ money-losing cable network that has been on the block informally for ages.
(Jill Goldsmith in New York contributed to this report.)